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  4. May 2020
  5. The Looming Threat of Tariff Hikes: Entry into Exporting under Trade Agreement Renegotiation

The Looming Threat of Tariff Hikes: Entry into Exporting under Trade Agreement Renegotiation

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Abstract

We examine how the looming threat of tariff hikes under a trade agreement renegotiation impacts firm entry into a trading partner's market by exploiting uncertainty over the future UK-EU trade relationship brought about by the June 2016 Brexit referendum. Using the universe of UK export transactions at the firm and product level, we find that uncertainty over future market access to the EU deterred entry modestly in the months immediately after the Brexit vote, but the deterrent effect increased over time.

Citation

Crowley, Meredith A., Oliver Exton, and Lu Han. 2020. "The Looming Threat of Tariff Hikes: Entry into Exporting under Trade Agreement Renegotiation." AEA Papers and Proceedings, 110: 547-51. DOI: 10.1257/pandp.20201020

Additional Materials

JEL Classification

  • F13 Trade Policy; International Trade Organizations
  • F14 Empirical Studies of Trade
  • F15 Economic Integration